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Generac (GNRC) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
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Generac Holdings Inc (GNRC - Free Report) reported second-quarter 2023 adjusted earnings of $1.08 per share, which missed the Zacks Consensus Estimate of $1.16. GNRC reported adjusted earnings per share of $2.86 in the prior-year quarter.
Net sales decreased 23% year over year to $1 billion but beat the consensus estimate of $985 million. The year-over-year performance was affected by softness in Residential products owing to the soft consumer-demand environment. However, it was partly offset by robust demand for Commercial & Industrial (C&I) products.
In the quarter under review, core sales growth (excluding the impact of acquisitions and foreign currency) decreased 26% year over year.
Owing to a weaker-than-expected consumer environment, Generac now anticipates Residential product sales to be lower than earlier expectations during the second half of 2023. However, C&I product sales are now projected to grow at a mid-teens rate compared with the earlier guided range of a mid-to-high single-digit growth.
Generac Holdings Inc. Price, Consensus and EPS Surprise
For 2023, GNRC now estimates revenues to decline in the range of 10-12% compared with the earlier guidance of a decline in the range of 6-10%. This includes a net favorable impact of 2% from acquisitions and foreign currency changes.
Net income margin (before deducting for non-controlling interests) is now expected to be 6-7% compared with the earlier guided range of 7.5-8.5%. Adjusted EBITDA margin is estimated in the 15.5-16.5% band compared with the earlier guided range of 17-18%.
Shares of GNRC are down 15.8% in the pre-market trading on Aug 2. The stock has lost 38.4% of its value compared with the sub-industry’s decline of 55.5%.
Image Source: Zacks Investment Research
Quarter in Details
Segment-wise, Domestic revenues plunged 28% year over year to $815.3 million. Core revenues were down due to lower home standby and clean energy product shipments partly offset by higher smart thermostat sales.
International revenues rose 10% to $223.7 million. Core revenues were driven by strength across all geographies, noted the company. The positive impact of acquisitions and forex contributed nearly 4% growth to revenues.
Product-wise, revenues from Residential tumbled 44% to $499 million. C&I revenues were $384 million, up 24% from the year-ago quarter’s levels. Revenues from the Other product class totaled $117.5 million, gained 36.6% year over year.
The Zacks Consensus Estimate for second-quarter revenues in the Residential and C&I products was pegged at $546 million and $343 million, respectively.
Margins
Gross profit was $328.4 million, down from $457 million from the prior-year quarter, with respective margins of 32.8% and 35.4%. Gross profit margin declined due to an unfavorable sales mix partly offset by pricing actions and lower input costs.
Total operating expenses were $242.5 million, up 1% from the prior-year quarter’s levels. The uptick was caused by higher employee and marketing costs, and recurring operating expenses from recent acquisitions extensively offset by reduced variable operating expenses.
Operating income came in at $86 million, down 60.4% year over year. Adjusted EBITDA before deducting for non-controlling interests was $137 million compared with $271 million in the year-ago quarter.
Cash Flow & Liquidity
In the second quarter, the company generated $83 million of net cash from operating activities. Free cash outflow totaled $54 million.
As of Jun 30, GNRC had $192.8 million in cash and cash equivalents, with $1.523 billion of long-term borrowings and finance lease obligations.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has gained 4.8% in the past 60 days to $2.82 per share. BMI’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 69.3% in the past year.
The consensus mark for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.5%. Shares of CRM have grown 22% in the past year.
The consensus estimate for Autodesk’s fiscal 2024 earnings of $7.25 per share remained flat in the past 60 days. The long-term earnings growth rate is anticipated to be 24.3%.
ADSK’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 2.1%. Shares of ADSK have declined 1.7% in the past year.
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Generac (GNRC) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
Generac Holdings Inc (GNRC - Free Report) reported second-quarter 2023 adjusted earnings of $1.08 per share, which missed the Zacks Consensus Estimate of $1.16. GNRC reported adjusted earnings per share of $2.86 in the prior-year quarter.
Net sales decreased 23% year over year to $1 billion but beat the consensus estimate of $985 million. The year-over-year performance was affected by softness in Residential products owing to the soft consumer-demand environment. However, it was partly offset by robust demand for Commercial & Industrial (C&I) products.
In the quarter under review, core sales growth (excluding the impact of acquisitions and foreign currency) decreased 26% year over year.
Owing to a weaker-than-expected consumer environment, Generac now anticipates Residential product sales to be lower than earlier expectations during the second half of 2023. However, C&I product sales are now projected to grow at a mid-teens rate compared with the earlier guided range of a mid-to-high single-digit growth.
Generac Holdings Inc. Price, Consensus and EPS Surprise
Generac Holdings Inc. price-consensus-eps-surprise-chart | Generac Holdings Inc. Quote
For 2023, GNRC now estimates revenues to decline in the range of 10-12% compared with the earlier guidance of a decline in the range of 6-10%. This includes a net favorable impact of 2% from acquisitions and foreign currency changes.
Net income margin (before deducting for non-controlling interests) is now expected to be 6-7% compared with the earlier guided range of 7.5-8.5%. Adjusted EBITDA margin is estimated in the 15.5-16.5% band compared with the earlier guided range of 17-18%.
Shares of GNRC are down 15.8% in the pre-market trading on Aug 2. The stock has lost 38.4% of its value compared with the sub-industry’s decline of 55.5%.
Image Source: Zacks Investment Research
Quarter in Details
Segment-wise, Domestic revenues plunged 28% year over year to $815.3 million. Core revenues were down due to lower home standby and clean energy product shipments partly offset by higher smart thermostat sales.
International revenues rose 10% to $223.7 million. Core revenues were driven by strength across all geographies, noted the company. The positive impact of acquisitions and forex contributed nearly 4% growth to revenues.
Product-wise, revenues from Residential tumbled 44% to $499 million. C&I revenues were $384 million, up 24% from the year-ago quarter’s levels. Revenues from the Other product class totaled $117.5 million, gained 36.6% year over year.
The Zacks Consensus Estimate for second-quarter revenues in the Residential and C&I products was pegged at $546 million and $343 million, respectively.
Margins
Gross profit was $328.4 million, down from $457 million from the prior-year quarter, with respective margins of 32.8% and 35.4%. Gross profit margin declined due to an unfavorable sales mix partly offset by pricing actions and lower input costs.
Total operating expenses were $242.5 million, up 1% from the prior-year quarter’s levels. The uptick was caused by higher employee and marketing costs, and recurring operating expenses from recent acquisitions extensively offset by reduced variable operating expenses.
Operating income came in at $86 million, down 60.4% year over year. Adjusted EBITDA before deducting for non-controlling interests was $137 million compared with $271 million in the year-ago quarter.
Cash Flow & Liquidity
In the second quarter, the company generated $83 million of net cash from operating activities. Free cash outflow totaled $54 million.
As of Jun 30, GNRC had $192.8 million in cash and cash equivalents, with $1.523 billion of long-term borrowings and finance lease obligations.
Generac currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Salesforce (CRM - Free Report) and Autodesk (ADSK - Free Report) . Badger Meter sports a Zacks Rank #1 (Strong Buy) while each of Salesforce and Autodesk carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has gained 4.8% in the past 60 days to $2.82 per share. BMI’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 6.7%. Shares of BMI have surged 69.3% in the past year.
The consensus mark for Salesforce’s fiscal 2024 earnings is pegged at $7.44 per share, up 0.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.3%.
CRM’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 15.5%. Shares of CRM have grown 22% in the past year.
The consensus estimate for Autodesk’s fiscal 2024 earnings of $7.25 per share remained flat in the past 60 days. The long-term earnings growth rate is anticipated to be 24.3%.
ADSK’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 2.1%. Shares of ADSK have declined 1.7% in the past year.